The aim of a budget is to plan and build to the point where you achieve financial wellbeing. Now that you have completed both the income side and the expenses side of your budget, it is time to review your work, and get ready for a few home truths.

This is the time when you may realise some stark home-truths. For example:

Your budget should be viewed as a plan for the future, not merely a reflection of your past spending habits

There are certain expenses you can’t avoid (e.g. rates, loans, rent etc) and there are others that are entirely discretionary (e.g. food, clothing, personal items, treats, eating out). In other words, it is up to you whether you spend the money or not.

You may find that you have little or no savings (i.e. too bad if the fridge breaks down)

You will never be able to afford that holiday next year unless something changes

You have eliminated takeaways but you still can’t break even (i.e. your expenses are still higher than your income).

If you are running your household at a loss, the difference will be reflected in your increased borrowing. Now you realise why your credit card bill keeps rising

You don’t have health insurance, enough life insurance or superannuation so your entire financial planning is at risk

That your dental bills are high and perhaps you should review your health insurance to include dental cover

Now that you see the expenses involved, it might be too expensive to run two cars

You are spending a fortune on packaged food and treats at the supermarket and not enough on fresh food. It may be cheaper to acquire more cold storage and buy in bulk

You may want to divert some money to long term savings

You may start thinking about how you can earn more income

You have several loans and they may need to be consolidated

That if you want to continue on just the way you are then you are going to have to increase you income

You may wish to revisit some of your ‘expenses’ on your budget planner and re-prioritise them. So it is now time to make a second pass at your budget.